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How’s General Motors faring?

Two months after General Motors celebrated its 100th birthday, the company is facing a grim scenario that it may not survive to see another year unless something drastic is done by the government thru a federal bailout. The grim internal condition of the company can be seen in the performance of its shares in the stock market. The shares of General Motors sank to their lowest point in 65 years to $2.92 some time the first week of November this year.

The drop in value came a day after the company revealed in a federal filing that its ability to continue as a profitable company is in substantial doubt because the company may run out of money by the end of the year. The cash cushion of the company has been shrinking by more than $2 billion a month this fall. And if the situation continues, the company’s reserves will fall the minimum of $10 billion in cash that it needs to run its global operations by January next year. When that scenario happens, the company may not be unable to pay its suppliers, meet the company’s loan agreements and cover the healthcare obligations in its labor contracts.

The federal filing by the company this week revealed in greater detail the problem within the company. According to some analysts, only an emergency federal bailout stands between GM and a bankruptcy filing. General Motors is part of the Big Three that is suffering in the current economic turmoil. The other two companies include Ford Motors and Chrysler.



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